2023 (1) TMI 428 - HC - Income Tax

Reopening of assessment u/s 147 - notice passed u/s.148 was not signed by the AO digitally or manually - curable defect u/s 292B - HELD THAT - Applying the ratio of the judgment of B.K. Gooyee 1965 (2) TMI 101 - CALCUTTA HIGH COURT and Aparna Agency (P.) Ltd. 2004 (3) TMI 51 - CALCUTTA HIGH COURT to the facts of the present case, the signature of the Assessing Officer admittedly not having been affixed on the notice issued u/s.148 of the Act, the notice itself would be invalid and consequently, the Assessing Officer could not assume jurisdiction to proceed in the matter in terms of section 148 of the Act. As in Umashankar Mishra 1982 (4) TMI 60 - MADHYA PRADESH HIGH COURT has dealt with a similar fact situation where the first substantial question of law dealt with in that case had considered the effect of whether an unsigned notice can be considered as an irregularity or clerical mistake. The Madhya Pradesh High Court after making reference to the conclusions drawn in B.K.Gooyee (supra) by the Calcutta High Court, has taken the view, that a notice without a signature affixed on it is an invalid notice and is effectively no notice in the eyes of law. The Madhya Pradesh High Court in Umashankar (supra) has further dealt with the second substantial question of law as to whether the Tribunal was right in holding that the absence of a signature on the notice constitutes a mistake or omission within the meaning of section 292B of the Act and while addressing itself to that question, has concluded that in the absence of a signature on the notice, the same would not constitute a mistake or omission and would not be curable under the provisions of section 292B of the Act. The notice u/s.148 having no signature affixed on it, digitally or manually, the same is invalid and would not vest the Assessing Officer with any further jurisdiction to proceed to reassess the income of the petitioner. Decided in favour of assessee.

Issues Involved:
1. Validity of unsigned notice under Section 148 of the Income Tax Act, 1961.
2. Applicability of Section 292B of the Income Tax Act to cure defects in the notice.
3. Jurisdictional error due to unsigned notice and its implications on reassessment proceedings.
4. Compliance with the limitation period under Section 149(1)(b) of the Act.

Detailed Analysis:

1. Validity of Unsigned Notice under Section 148 of the Income Tax Act, 1961

The petitioner contended that the notice dated 02.04.2022 issued under Section 148 was unsigned and therefore invalid. It was argued that the unsigned notice, received by speed post, lacked the necessary legal validity and thus did not confer jurisdiction to the Assessing Officer to proceed with reassessment. The respondents did not substantially deny that the notice was unsigned, either digitally or manually. The court noted that the original notice produced for inspection was indeed unsigned.

2. Applicability of Section 292B of the Income Tax Act to Cure Defects in the Notice

The respondents argued that the defect of an unsigned notice could be cured under Section 292B of the Act, which allows for the rectification of mistakes or omissions in notices. However, the petitioner referred to several judgments, including the Calcutta High Court's decision in B.K. Gooyee v. Commissioner of Income-tax and the Madhya Pradesh High Court's decision in Umashankar Mishra v. Commissioner of Income-tax, to argue that the absence of a signature is not a mere procedural defect but a fundamental flaw that invalidates the notice. The court agreed with this view, stating that a notice without a signature is "a notice with a body but without a soul," and hence invalid.

3. Jurisdictional Error Due to Unsigned Notice and Its Implications on Reassessment Proceedings

The court held that the unsigned notice was invalid and therefore did not confer jurisdiction on the Assessing Officer to proceed with reassessment. The court cited the principle that a valid notice is a condition precedent for assuming jurisdiction. The absence of a signature on the notice meant that the jurisdictional requirement was not fulfilled, rendering all subsequent proceedings void.

4. Compliance with the Limitation Period under Section 149(1)(b) of the Act

The petitioner argued that the notice was issued beyond the three-year limitation period prescribed under Section 149(1)(b) of the Act. The court noted that since the unsigned notice was invalid, any steps taken in furtherance of this notice were without jurisdiction and thus arbitrary and contrary to Article 14 of the Constitution of India.

Conclusion

The court concluded that the notice dated 02.04.2022 issued under Section 148 of the Act was invalid due to the absence of a signature. Consequently, the Assessing Officer did not have the jurisdiction to proceed with reassessment. The court quashed and set aside the notice dated 02.04.2022, the order under clause (d) of Section 148A dated 02.04.2022, and the notice under clause (b) of Section 148A dated 21.03.2022. The rule was made absolute in terms of prayer clauses (a) and (b) of the petition.

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